Ambev Reports 2015 Third Quarter Results Under IFRS

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Oct 30, 2015, 02:15 ET

SAO PAULO, Oct. 30, 2015 /PRNewswire/ -- Ambev S.A. [BOVESPA: ABEV3; NYSE: ABEV] announces today its results for the 2015 third quarter. The following operating and financial information, unless otherwise indicated, is presented in nominal Reais and prepared according to International Financial Reporting Standards (IFRS), and should be read together with our quarterly financial information for the nine-month period ended September 30, 2015 filed with the CVM and submitted to the SEC.

Operating and Financial Highlights

Top line performance: Our consolidated top line was up 13.2% in the quarter, driven by growth in all of our markets (Brazil +10.5%, CAC +24.8%, LAS +28.0% and Canada +3.0%). Volumes expanded by +0.2%, as the growth in Brazil (+1.0%), CAC (+16.1%) and Canada (+1.2%) was partially offset by a 6.4% decline in LAS. Net revenue per hectoliter (NR/HL) was up by a solid 13.0% driven by our revenue management initiatives, a benefit of premium mix across most of our operations and the higher weight of direct distribution in Brazil.

Cost of Goods Sold (COGS): Our COGS increased 14.1% and cash COGS were up 13.7%. On a per hectoliter basis, cash COGS increased 13.5%, mainly driven by inflationary pressures, unfavorable currency hedges and product mix, partially offset by the benefit of procurement savings initiatives, productivity gains and better commodity hedges.

Selling, General & Administrative (SG&A) expenses: SG&A expenses (excluding depreciation and amortization) were up 14.3% in the quarter mainly coming from higher sales and marketing expenses, the impact from increased weight of our direct distribution in Brazil and higher administrative costs due to the timing of variable compensation accruals, partially offset by savings in our non working money base.

EBITDA, Gross margin and EBITDA margin: Normalized EBITDA reached R$ 4,992 million (+11.7%) with an EBITDA margin of 46.5% (-60bps). Gross margin was 20 basis points down in the quarter to 65.2%.

Normalized Net Profit and EPS: Normalized Net Profit was R$ 3,087 million in the quarter, 6.3% above last year, as EBITDA growth was partially offset in the quarter by higher net interest expenses and a higher effective tax rate. Year to date, Net Profit is up 15.0%. Normalized EPS was R$ 0.19 in 3Q15 and R$ 0.54 YTD.

Operating Cash generation and CAPEX: We generated R$ 6.2 billion of cash from our operations in the quarter, a 49% increase versus last year, mainly as a result of stronger operational performance and better working capital management. CAPEX reached R$ 3.2 billion YTD, of which R$ 2.2 billion in Brazil (flat yoy).

Pay-out and Financial discipline: During the third quarter, we paid approximately R$ 2.5 billion in dividends and repurchased circa R$ 380 million of Ambev shares, which brought the YTD total payout figure close to R$ 9.9 billion or a 16% increase versus the same period of last year (including dividends, IOC and buybacks). As of September 30^th, 2015, our net cash position was R$ 7,223 million.

Financial Highlights – Ambev			% As		%			% As	%
Consolidated			% As		%			% As	%
*R$ million*	3Q14	3Q15	Reported		Organic	YTD14	YTD15	Reported	Organic
Total volumes	39,898.4	39,988.4	0.2%		0.2%	122,193.6	121,129.4	-0.9%	-0.9%
Beer	28,896.9	30,104.5		4.2%	4.2%	88,682.6	89,372.5	0.8%	0.8%
CSD and NANC	11,001.5	9,883.8	-10.2%		-10.2%	33,511.0	31,756.9	-5.2%	-5.2%

Net sales	8,624.4	10,745.1	24.6%		13.2%	25,846.9	31,423.9	21.6%	12.7%
Gross profit	5,668.6	7,001.2	23.5%		12.8%	16,842.2	20,291.5	20.5%	12.1%
Gross margin	65.7%	65.2%	-50 bps		-20 bps	65.2%	64.6%	-60 bps	-40 bps

Normalized EBITDA	4,096.3	4,992.0	21.9%		11.7%	11,474.7	14,188.3	23.6%	15.6%
Normalized EBITDA margin	47.5%	46.5%	-100 bps		-60 bps	44.4%	45.2%	80 bps	110 bps
Normalized Profit	2,902.7	3,086.6	6.3%			7,728.8	8,887.0	15.0%
Normalized EPS	0.18	0.19	4.7%			0.48	0.54	12.6%
Note: Earnings per share calculation is based on outstanding shares (total existing shares excluding shares held in treasury).

This press release segregates the impact of organic changes from those arising from changes in scope or currency translation. Scope changes represent the impact of acquisitions and divestitures, the start up or termination of activities or the transfer of activities between segments, curtailment gains and losses and year over year changes in accounting estimates and other assumptions that management does not consider as part of the underlying performance of the business. Unless stated, percentage changes in this press release are both organic and normalized in nature. Whenever used in this document, the term "normalized" refers to performance measures (EBITDA, EBIT, Profit, EPS) before special items adjustments. Special items are either income or expenses which do not occur regularly as part of the normal activities of the Company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the Company due to their size or nature. Normalized measures are additional measures used by management and should not replace the measures determined in accordance with IFRS as indicators of the Company's performance. Comparisons, unless otherwise stated, refer to the third quarter of 2014 (3Q14). Values in this release may not add up due to rounding.

SOURCE Ambev S.A.